AUGUSTA, Maine — Federal budget cuts and Maine’s falling unemployment rate have combined to reduce the number of weeks Mainers can claim unemployment benefits from 63 to 46.
The changes will affect roughly 1,100 of the 15,000 Mainers who are collecting unemployment benefits, according to Julie Rabinowitz, a spokeswoman for the Maine Department of Labor.
At issue is the federal Emergency Unemployment Compensation program, which Congress created in 2008 to extend the unemployment benefit programs administered by the states in the wake of the recession.
Maine’s Unemployment Insurance program provides 26 weeks of unemployment benefits to people who were laid off through no fault of their own. That is funded through the state’s Unemployment Trust Fund.
If a person looking for work hasn’t found a job after 26 weeks, the emergency federal program kicks in with its three tiers — the first two tiers each extend weekly benefits by 14 weeks, and the third tier, which includes the people who have been unemployed the longest, extends benefits for an additional nine weeks.
The number of tiers the federal government will support within a state is based on that’s state’s rolling three-month average unemployment rate. The theory is that as the unemployment rate falls, there’s less need for the extended unemployment benefits.
The federal program extended the number of weeks a person in Maine could receive unemployment benefits by 37 weeks, to a total of 63.
In May, federally mandated budget cuts known as sequestration forced the Maine Department of Labor to reduce the number of weeks unemployed workers in the third tier could claim benefits for by eight weeks in order to reduce costs by 10.7 percent for the federal 2013 fiscal year, which ends Sept. 30, according to Rabinowitz.
Then Maine’s unemployment rate dropped in May to 6.8 percent, which brought the state’s rolling three-month average below the 7 percent threshold needed for the federal government to support a third tier.
“We received a trigger letter from the Department of Labor that says basically your unemployment rate has dropped, so you have to eliminate Tier 3 benefits and you need to do it immediately,” said Rabinowitz. Beneficiaries are given notice, she said.
The elimination of Tier 3 benefits because of Maine’s falling unemployment rate does not meet the cost-cutting criteria imposed by sequestration, Rabinowitz said. Therefore, the state now will be forced to cut Tier 2 benefits by eight weeks to meet that 10.7 percent cost-cutting measure by Sept. 30, Rabinowitz said.
“Although we welcome Maine’s improving employment situation, we do understand that this will bring challenges to people in the affected tiers,” Commission of Labor Jeanne Paquette said in a statement.
To help with the transition, Paquette said Maine’s network of CareerCenters will increase their job-search services and training to help job seekers find new positions.
“We will continue to do our best to connect everyone on unemployment with good jobs and encourage everyone to take advantage of these free services,” Paquette said.
According to the Labor Department, the last week in which a person collecting benefits under Tier 2 can establish a claim under Tier 3 is the week ending July 13. Starting with the week beginning July 14, a person entering into or collecting benefits under Tier 2 will be limited to six weeks of benefit collection.
There are good signs that fewer people are relying on unemployment benefits, Rabinowitz said.
In the week ending June 22, there were 11 percent fewer continuing claims filed under the state’s Unemployment Insurance program than the same week the year before, Rabinowitz said. Continuing claims are those filed any week after the initial week.
“What we’re seeing is that there’s less unemployment, there’s fewer people filing for unemployment and fewer people moving into extended unemployment benefits, which is good news for people who are finding employment and good news for the trust fund because it means paying out fewer benefits,” she said.
That, in turn, could mean the unemployment insurance tax Maine businesses pay to fill the Unemployment Trust Fund could be reduced next year, Rabinowitz said. That decision will be made in the fall, she said.